Chapter 12: Application Analysis - Borrower Documents

1.      Briefly describe when a Mortgage Agent would be required to obtain the following documents from an applicant.

a) T4 b) T4A c) Job Letter d) Paystub e) NOA f) Agreement of Purchase and Sale g) Gift Letter h) Property Assessment i) Property Tax Bill j) Mortgage Statement k) Status Certificate

a)      T4:  typically when a Borrower has salaried or hourly employment income

b)      T4A: typically when a Borrower has commission income

c)      Job Letter: typically when a Borrower’s income or position information is required

d)     Paystub: typically in addition to a Job Letter to confirm that the individual is still employed and that the YTD income matches the Job Letter

e)      NOA: typically to support income verification for a previous year and/or to confirm that there are no income taxes outstanding

f)       Agreement of Purchase and Sale: typically when a Borrower is purchasing a property

g)      Gift Letter: if the Borrower is using funds for his or her down payment that has been given to him or her by a family member

h)      Property Assessment: can be used by the Agent to support the Borrower’s value of his or her house.  It is not used to confirm the value nor will the Lender accept this, but it can support the value.

i)        Property Tax Bill: used to confirm the amount of taxes payable and if any property taxes are outstanding

j)        Mortgage Statement: typically used to confirm the outstanding balance of a Borrower’s current mortgage when refinancing

k)      Status Certificate: required when financing a condominium unit

2.      Describe the information found in an MLS document.

An MLS will provide details about the property, its sale price and Realtor information.

3.      What is a Certificate of Independent Legal Advice and under what circumstances would it be required?

This document proves that an individual has been given advice by his or her lawyer with regards to the proposed mortgage.  It is usually required when the proceeds of a refinance are being provided to a third party and not the Borrower or if the loan is a reverse mortgage.

4.      Under what circumstances must a Mortgage Agent complete a Creditor Insurance Application?

This must be completed in every transaction, since part of the application is the waiver.  If the Borrower(s) want the insurance the full application must be completed, if they do not they must complete the waiver section.

5.      What information must be in a Job Letter for it to be acceptable to a Lender?

It should be on company letterhead, have the company address and contact information, list the Borrower’s position, income, how it is paid (i.e. salary or hourly), the frequency of payment (i.e. weekly), if the person is full or part-time and/or on probation, the start date and the writer’s information and contact information.

6.      The next section contains blank documents found in this chapter. Test your knowledge of these documents by writing the appropriate information in documents’ blank fields without referring to the chapter. Once done, refer to the chapter to review the accuracy of your answers.

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